Keep personal and business finances separate - If you mix the two up, it makes your bookkeeping more difficult to handle. It may seem dealable at the outset, but things get complicated fast. By keeping them distinct, you’ll save yourself hours of work and make it easy to keep track of deductible expenses and cash flow.
Maintain accurate records - Otherwise you don’t have a reliable way to track the finances of your business. With a good system set up, accurate record keeping can take just a few minutes a day. If you let it get out of hand, and a backlog forms, your finances can become a severe, and potentially very expensive, headache. You must normally keep records for at least 6 years from the end of the last company financial year they relate to, both for your own purposes and to hand over to authorities who may ask to see them.
Track and claim all business expenses - For the most part, you can claim for any cost incurred wholly and exclusively for business, which covers even the smallest costs, like stamps, stationery, and transportation. To claim your expenses, you should keep receipts for each of them, which will substantiate those items for your records should you be audited.
Keep cash spending to a minimum - This simplifies the tracking of your expenses, as with cash spending you can easily forget what was spent when and where. Whereas with a a debit or credit card you'll have a paper and/or online statement providing reliable data to fall back on when your memory fails you.
Go digital - Whether it's an Excel spreadsheet on your computer or online bookkeeping software, having a digital system in place is highly recommended. This makes it simpler to create reports and analyse the financial status of your business. Spending a few minutes each day scanning your receipts to create digital copies makes sense too.
Take regular back-ups of your data - All files containing your financial data should be backed up once a week and kept in at least two different locations. Keeping a copy saved on a cloud server is recommended. This is something businesses know they should do but don't, then regret it when it's too late.
Allocate weekly time to go over your books - Give yourself at least thirty minutes per week to assess your finances. These regular reviews provide many benefits, such as giving you a clear understanding of how money is being spent, lessening the chances of paperwork getting lost, bringing discrepancies to immediate attention, and generally letting you know exactly how your business is going.
Stay on top of invoices - Once a product or service has been delivered, send the invoice straight away: research shows you’re more likely to get paid more quickly. If it's not paid quickly, chase it up with a reminder. The longer you leave it, the longer they've effectively got an interest free loan from your business, which is good for them but bad for your cash flow.
Plan for major expenses - Set aside money for major expenses - supplies, repairs, maintenance, etc. - a year or more in advance. By budgeting ahead you'll avoid overspending in flush periods only to find yourself short when it's most needed.
Set aside money for paying taxes - Every business has to pay the taxman so make sure you budget for this as you go to avoid not having the funds available for year-end taxes. Opening a business savings account and systematically putting a portion of income aside throughout the year for taxes is advisable.
Know your dates - Make sure you know well in advance the dates your accounts, VAT, PAYE, etc. are due. Write them on a physical calendar and also setup alerts on your phone or computer. Being prepared means avoiding the heavy fines and penalties that late payments and returns can incur.
Don't take shortcuts or try to beat the system - Anyone from a large company to a one person business can be audited, and if you're caught out bending or breaking the rules then you could face penalties, fines or even prison time. No one thinks they'll get caught, but everyday people do get caught. Don't do it; it's not worth the risk.
Educate yourself - Spending a few hours learning the basics of bookkeeping is a wise investment of your time and will make what you need to do seem less overwhelming. You could buy a book, research online or go to a free HMRC workshop, which cover topics such as how to run payroll, self assessment for self-employed people, and setting up a limited company.
Get professional bookkeeping assistance - You might initially be able to manage your own bookkeeping, but in the long run it's more cost-effective to outsource all or part of your bookkeeping to professional bookkeepers so you can free up your time to focus on running your business. This also removes the risk of mistakes being made and fines for non-compliance being incurred.
If you need assistance with your bookkeeping, get in touch with Robinett Bookkeeping now to see how we can help you: 020 8979 6339 or firstname.lastname@example.org or Contact Form